TL;DR: the main types of auctions
- Open ascending: English and Japanese auctions, where the price rises until one bidder is left.
- Descending: Dutch auctions, where the price falls until someone accepts.
- Sealed-bid: first-price and Vickrey (second-price) auctions, where bids are secret.
- Reverse: sellers compete to supply a buyer at the lowest price.
- Special formats: silent, penny (bid-fee), all-pay, candle, Yankee and multi-unit auctions.
- Every format can also be absolute or with reserve, and run timed online or live.
Running auctions yourself? Our auction software supports English, Dutch, sealed-bid, reverse, silent and penny formats on one platform.
“Auction” covers a dozen different mechanisms. The one most people picture, an auctioneer taking rising bids until the hammer falls, is only one of them. Others run the price downwards, keep every bid secret, or have suppliers bidding to win a contract instead of buyers bidding to win an item. Which type you use changes who wins, what they pay, and how long the sale takes.
Here are the 14 types worth knowing, grouped by how the price moves.
Types of auctions at a glance
| Type | How the price moves | Winner pays | Typical use |
|---|---|---|---|
| English | Rises, open bids | Their winning bid | Most live and online auctions |
| Japanese | Rises on a clock, bidders drop out | Price when the last rival drops | Some financial and industrial sales |
| Dutch | Falls until someone accepts | The price when they accept | Flowers, fish, liquidation, some IPOs |
| First-price sealed | One secret bid each | Their own bid | Tenders, real estate, government sales |
| Vickrey (second-price sealed) | One secret bid each | The second-highest bid | Auction theory, some online formats |
| Reverse | Falls, sellers compete | Buyer pays the lowest acceptable offer | Procurement, freight |
| Silent | Rises on bid sheets or phones | Their winning bid | Charity fundraisers |
| Penny (bid-fee) | Rises by tiny steps | Final price plus every bid fee | Entertainment shopping sites |
| All-pay | Any | Everyone pays their bid | Mostly theory and contests |
| Candle | Rises until a candle burns out | Their winning bid | Historic and ceremonial sales |
| Yankee | Rises, several identical items | Each winner pays their own bid | Multiple identical lots |
| Multi-unit uniform price | Sealed or rising, many units | All winners pay the same clearing price | Treasury bills, some IPOs |
| Combinatorial (package) | Bids on bundles | Varies | Spectrum, logistics, land tracts |
| Buy It Now hybrid | Rises, with a fixed-price exit | Bid or Buy It Now price | eBay-style marketplaces |
Open ascending auctions
1. English auction
The classic format. Bidders raise the price openly in set increments, and the last bidder standing wins and pays their bid. Almost every live auction and most online auctions are English auctions. Online, proxy bidding lets you set a maximum and have the system bid for you one increment at a time. See what a proxy bid auction is and how bid increments affect the final price.
2. Japanese auction
A variant where the price rises continuously on a clock and every bidder must actively stay in. Once you drop out, you can’t come back. The auction ends when only one bidder remains, who pays the price at which the last rival left. It reveals more information than an English auction because everyone can see how many bidders are still in.
Descending auctions
3. Dutch auction
The price starts high and drops on a clock until the first bidder accepts. That bidder wins at that price, and the sale is over in seconds. It’s how Dutch flower auctions have moved huge volumes for over a century, and it suits perishables and stock that has to sell fast. The term is also used for some share offerings. Full explanation in what is a Dutch auction.
Sealed-bid auctions
4. First-price sealed-bid auction
Each bidder submits one secret bid by a deadline. The highest bid wins and pays exactly what they bid. Because there’s no second chance, bidders shade their bids below what the item is worth to them. Common for government tenders, real estate and fleet sales.
5. Vickrey auction (second-price sealed-bid)
Also sealed, but the winner pays the second-highest bid. Named after economist William Vickrey, who described it in a 1961 paper and later shared the 1996 Nobel Prize in economics, it has a neat property: your best strategy is to bid exactly what the item is worth to you, because your bid only decides whether you win, not what you pay. Online proxy bidding behaves much like a Vickrey auction, since the winner usually pays one increment above the second-highest maximum. More on both sealed formats in sealed bid vs. open outcry.
Reverse auctions
6. Reverse auction
The roles flip: one buyer, many sellers, and the price goes down. Suppliers bid lower and lower to win a contract, and the buyer usually picks the lowest acceptable offer, sometimes weighted by quality or delivery. It’s the standard tool in procurement and freight. See what is a reverse auction, forward vs. reverse auctions and freight reverse auctions.
Special formats
7. Silent auction
Bidders write bids on sheets next to each item, or more often now on their phones, and the highest bid at closing wins. It’s the default format at charity galas because it runs alongside dinner without an auctioneer. Read what is a silent auction.
8. Penny auction (bid-fee auction)
Each bid costs the bidder a fee and raises the price by a tiny amount, often a cent, and resets a short timer. The winner pays the low final price, but every bid placed by everyone has already been paid for. It’s controversial, and the maths is in how penny auctions work.
9. All-pay auction
Every bidder pays their bid, win or lose. It’s mostly used to model contests, lobbying and races in economics, and penny auctions are a real-world cousin.
10. Candle auction
Bidding continues until a short candle goes out, and the last bid before it does wins. Used in England from the 17th century, it survives in a few ceremonial sales. It’s the ancestor of the random or soft close: nobody can be sure exactly when bidding ends, which discourages last-second sniping.
11. Yankee auction
Several identical items are offered at once. The highest bidders each win one or more units and each pays their own bid. Useful for selling 50 identical laptops without running 50 separate auctions.
12. Multi-unit uniform-price auction
Also for many identical units, but every winner pays the same clearing price, usually the lowest winning bid. Governments use it to sell treasury bills, and some share offerings work this way.
13. Combinatorial (package) auction
Bidders can bid on bundles of items rather than single items, because a bundle can be worth more than its parts. Spectrum licences are the famous example (the US FCC has run spectrum auctions since 1994), and multi-parcel land auctions work on the same idea.
14. Buy It Now hybrid
A normal English auction with a fixed price that ends it immediately if someone pays. Popularised by eBay, it suits items with a clear market value. Compare the two in auction vs. Buy It Now.
Rules that apply to every type
On top of the format, two more choices shape every sale. First, absolute or reserve: will the item sell at any price, or only above a minimum? See absolute vs. reserve auctions. Second, timed or live: an online auction that closes at a set time (usually with a soft close that extends on late bids), or a live sale with an auctioneer, often simulcast to online bidders. See how live auction websites work.
Which auction type should you use?
For most items with uncertain value, an English auction with proxy bidding and soft close is hard to beat: it’s familiar, transparent and lets competition set the price. Use a Dutch auction when speed matters more than squeezing out the last dollar. Use sealed bids when bidders need privacy or you’re selling to a small, serious group. Use a reverse auction when you’re the one buying.
Our auction software runs English auctions with proxy bidding and soft close, plus Dutch, sealed-bid, reverse, silent and penny auctions, Buy It Now and live simulcast, all on one platform. It runs on your own server, installed and set up by our team at no extra cost, for a one-time $899 to $2,999. Formats like Japanese or combinatorial auctions can be built as custom work.
Run any auction format on your own site
See the full feature list, try the live demo, or ask about a custom format.
Frequently asked questions
What are the main types of auctions?
English (ascending), Dutch (descending), first-price sealed-bid, Vickrey (second-price sealed-bid) and reverse auctions. Silent, penny, Japanese, Yankee and multi-unit auctions are variations.
What is a Vickrey auction?
A sealed-bid auction where the highest bidder wins but pays the second-highest bid. It encourages everyone to bid what the item is truly worth to them.
What is the difference between an English and a Dutch auction?
In an English auction the price rises until one bidder is left. In a Dutch auction the price falls until the first bidder accepts.
What is a Japanese auction?
An ascending auction where the price rises on a clock and bidders drop out one by one, with no re-entry. The last bidder left wins.
Which type of auction is most common online?
The English auction with proxy bidding, used by eBay and most online auction platforms, often with a Buy It Now option and a soft close.
